EUL Agricultural Sciences and Technologies Faculty Member Assoc. Dr. Turgut Alas made evaluations on the increase in food prices.
European University of Lefke (EUL ) Faculty Member of Agricultural Sciences and Technologies Assoc. Dr. Turgut Alas mentioned that the reasons for the increase in food prices can be listed under many titles, and said that the most important ones are global climate change, pandemic and the Russia-Ukraine war.
โWe have been feeling for a long time the negative effects of global shocks such as production shortage and pandemic due to the fact that production due to natural conditions are affected by seasonal and regional negative changes due to climate conditions, supply in production, demand in consumption, breaks in the supply chain, seasonal labor market and international trade. Finally, we can add the Russia-Ukraine war, which has been going on since the beginning of 2022,” said Alas, adding, “In addition to all these, the role assigned to the agricultural sector in general economic policies and the amount of shares allocated, the agricultural input, food supply chain and the monopolistic structure existing in the food industry in the world has increased food prices.
Alas continued his words as follows:
Again, the fact that Russia, the number one fertilizer exporter in the world after the war, stopped its fertilizer exports, causes fertilizer prices to reach very high amounts in a short time, less fertilizer use in other countries, and thus a loss of productivity in agricultural production.
In addition, after Russia cut off natural gas to Europe, leading companies in the fertilizer industry in Europe started to reduce their fertilizer production due to rising natural gas prices.
The reason why increasing natural gas prices affect fertilizer production is that natural gas is the raw material of fertilizer.
Record levels in this raw material are also resulting in key fertilizer companies cutting production. In other words, the war causes structural problems not only in food exports, but also in the export of fertilizer, which is one of the most important inputs of food.
In the continuation of his statement, Alas summarized the information about the food production of the world’s leading companies as follows:
Again, due to high energy prices, farmers in Europe decided to reduce production this winter. EU Farmers’ Association announced that pasteurization and milk powder production processes consume a lot of energy, and that the dairy and bakery sectors are most affected by price increases.
According to the European Commission, this increased the price of butter by 80 percent and the price of milk powder by 55 percent, respectively, at the end of August, compared to a year ago.
Nordic Greens Trelleborg, Sweden’s leading tomato producer, has announced that it will not plant winter crops this year, considering that high electricity prices will cause losses.
It was pointed out that the heat needed to grow off-season crops in the Netherlands is provided by electricity. It was stated that some greenhouses will not produce winter production, while others will shrink.
In Germany, the dairy industry warned that the industry could enter a serious crisis due to natural gas. At the same time, Germany’s largest fertilizer manufacturer announced that it stopped production due to energy prices.
In Turkey, the government has authorized the export of canned tomatoes and tomato paste to avoid problems in the domestic market. As can be seen, the situation has begun to threaten the global food supply, which is in crisis. In order to avoid any problems in the domestic market, the export of canned tomatoes and tomato paste has been granted permission.
Noting that fuel prices, especially diesel, which is another important input in agricultural production, affect production in two ways. Alas said, โEspecially the equipment used in modern agricultural production such as tractors, harvesters and machines, generators work mostly with fossil fuels.
At the same time, the fuel price for electricity generation and thus irrigation water is important. Due to the increasing electricity and fuel prices in our country, the prices of agricultural irrigation water have increased 3 times compared to the previous year.
Increase in electricity, fuel and irrigation water prices also directly affect the price increase of agricultural products.
While the food price index reached unprecedented levels in the first half of 2022, international organizations openly state that the increase in food prices will continue in the winter months of 2022 and in 2023, which may cause a food crisis.
When we look at our country, we can see similar problems experienced in the world. Many inputs such as seedlings, saplings, fertilizers, financing resources, labor, diesel/gasoline, agricultural machinery, water and energy are used for production. These inputs also constitute a production cost.
The farmer has no choice but to use these inputs for production. At the end of the day, by selling his product, he has to earn an income to cover his expenses (i.e. the cost of inputs) and maintain production by making a living”.
Considering the fertilizer prices, which are the most important input items that will increase plant development, yield and quality, he stated that an increase of almost 100 to 200 percent was observed in our country in the last year, and drew attention to the fact that an increase of nearly 25 percent was observed in seed prices in the last year.
Alas said, โWhen we add the price increase in energy resources such as diesel/gasoline and the electrical energy used for irrigation water accordingly, the increase in the input costs used in production in recent years has led to an increase in food pricesโ.
He also emphasized that it is considered as one of the most important factors in price increases.
As a result, Alas stated that there is no single reason for the increase in food prices, and the protectionist policies of developed countries; global climate change; pandemic; Russia-Ukraine war; rising energy prices and shortages of supply; wrong economic, agricultural and foreign trade policy; while input prices increase, the farmer’s income does not increase at the same rate and he suffers a loss.
He added that the decrease in agricultural production as a result of the loss making farmer giving up production or moving away from the right production models is one of the main reasons for the increase in food prices.
